Irish Gov't Outlines Brexit Risks
Jason Gorringe, Tax-News.com, London
30 August, 2017
Brexit "could have far-reaching impacts on nearly all aspects" of Ireland's national life, according to Irish Prime Minister Leo Varadkar.
Varadkar issued the warning in his foreword to the Government's National Risk Assessment (NRA) for 2017. This is the fourth annual NRA published by the Government, and is intended to identify the strategy risks that Ireland faces over the short, medium, and long term.
The report described the UK's withdrawal from the EU as "the most immediate and potentially serious risk for Ireland." It said that Ireland is "uniquely vulnerable" to Brexit-related economic shocks, with the UK accounting for around 17 percent of Irish exports.
In a worst-case scenario, trade between Ireland and the UK could be reduced by 20 percent or more on average.
The NRA explained: "The new post-exit EU-UK trading relationship could see Irish businesses subject to a new tariff regime and non-tariff barriers, which would raise the cost of doing business and reduce the competitiveness of Irish exporters operating within the all-island economy and exporting to the UK mainland."
The Government is concerned that, in a scenario where the UK reverted to the WTO trading regime post-Brexit, Ireland's agri-food sector would feel the brunt of high tariffs. "With the UK very tightly integrated into Irish food production, changes to the existing trading relationship will be challenging for the sector," the NRA stated.
More broadly, the NRA noted that Ireland's indigenous firms and exporters in the border region and rural areas are expected to experience "the greatest negative impacts (relative to multinationals)." Indigenous exporters to the UK have already been adversely affected by the fall in the value of Sterling, with currency fluctuation remaining a risk.
The report also briefly explored the risks posed by Ireland's overreliance on multinational corporations and the shifting international tax environment.
It noted that the "top 10 tax-paying groups account for close to 40 percent of tax receipts, making this revenue stream vulnerable to weaker global growth and changes to business models and processes in these sectors."
The report added that there "is a further risk of serious negative consequences due to changes to US trade and tax policy, or from a return to economic turbulence in Europe, with potential for populist politics to deliver an increased tendency towards protectionism and trade disruption." The European Commission's proposed common consolidated corporate tax base is identified in the NRA as posing a risk to Ireland's tax base.
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